Hedge Funds Expose Argentina to $14 Billion Payment Risk

Business Week – The relative calm in Argentina’s debt markets since its default in July may be shattered as the risk increases that holders of $14 billion in bonds will ask for their money back immediately, according to Bank of America Corp.

After a grace period expires next week, investors in Argentina’s so-called Par bonds can demand full repayment of principal originally due in 2038 as well as interest, according to the debt contracts. The outperformance of the Pars, which have returned 1.2 percent in the past three months versus losses of 5.5 percent for notes due 2033, is a signal to Bank of America that more bondholders are considering acceleration.